Question

Which of the statements below regarding the net capital gain or loss of a trust is not correct?

A. In the final year of a trust or state, any unused capital loss carryover is passed through to the remainder beneficiaries and keeps its original character.

B. Net capital gain is typically allocated to corpus, although it can be allocated to income if permitted by the trust instrument or local law.

Answer 1

Answer Both statements given in problem are correct regarding the net capital gain or loss of a trust.

1. In the final year of a trust or state, any unused capital loss carryover is passed through to the remainder beneficiaries and keeps its original character.

2.Net capital gain is typically allocated to corpus, although it can be allocated to income if permitted by the trust instrument or local law.

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